Germany awards tender to Fertiglobe for green ammonia from Egypt

By Riham Alkousaa

BERLIN (Reuters) -Germany has awarded a tender to buy at least 259,000 metric tons of green ammonia between 2027 and 2033 to UAE-based Fertiglobe, marking the first in a round of global tenders to import green hydrogen derivatives needed for decarbonisation.

Europe's biggest economy is seeking to expand the use of green hydrogen fuel - made from water using solar or wind power - to cut emissions from industrial sectors that are hard to electrify, such as steel and chemicals, and reduce dependency on fossil fuel imports.

Germany will need to import around 50% to 70% of its green hydrogen due to limited renewable energy resources needed to produce it.

"The import of green hydrogen products is a decisive step in the ramp-up of the hydrogen market in Germany," Economy Minister Robert Habeck said in a statement on Thursday.

Fertiglobe, a UAE-based partnership between Dutch OCI and Abu Dhabi National Oil Co (ADNOC), won the first tender for green ammonia which is used to make green hydrogen. It will be produced in Egypt, where 273 megawatts of renewable energy plants are being built, the ministry said.

The bids for the tender, which was first announced in late 2022 and had attracted bids from over 65 countries, were conducted under the H2Global programme, which Germany introduced in 2021 to drive the global market ramp-up of green hydrogen and boost investments.

"The successful auction via our H2Global instrument is a start, and further steps will follow soon," Habeck added.

Fertiglobe will produce up to 397,000 tons of renewable ammonia by 2033, beginning with an initial supply of 19,500 tons in 2027, with a maximum contract value of 397 million euros ($431 million), Hintco GmbH, the implementing entity of H2Global, said in a statement.

The auction established a contract price of 1,000 euros per ton, including delivery to Europe, and a net price of 811 euros per ton, Hintco said.

"The initial price signals from the pilot auction indicate substantial potential for achieving more competitive prices in future rounds," the company said.

The tender's volume accounts for more than 10% of Germany's annual ammonia production, the ministry said, adding it was working on another round of some 3.5 billion euros of green hydrogen import contracts, including a second 600 million euro funding round which will be co-financed with the Netherlands.

($1 = 0.9214 euros)

(Reporting by Riham Alkousaa, Editing by Jane Merriman and Mark Potter)